Virgin Australia : 315 Million Loss - How long can they survive?
 

To answer your question about why they can't make money in a duoply is simple: poor management which resulted in poor decisions being made which led to poor results.

10,151 in the 2018 Annual Report

It's not really a duopoly, the subsidised/ funded Jetstar makes it very difficult..

excuses excuses..

Isn't virgin also subsidised ?

Etihad Airways (21%)
Nanshan Group (22.4%)
Singapore Airlines (19.8%)
HNA Group (8%)

Haven't so many other airlines subsidised/funded Virgin heavily ?

Virgin has so much baggage from Borghetti, that I doubt it can survive. How many types does it have in it's fleet across it's way too numerous businesses?
I think they have even more types than Ansett did before it went under.
Sky West ....... dead weight.
Tiger Air ........ dead weight ...... a low cost carrier operated by a low cost carrier .......
Overpaid executives .......
Poor decisions like the Per-DPS / ADL-DPS disaster that was beyond incompetent
Serving soup to business class PAX as though it is a meal .......

It's a superior airline to Qantas all day long, but Borghettie's poor management has killed the goose that laid the golden egg.

Two factors have seen Qantas "look" good.
1. ****star isn't gobbling up so much cash flow now
2. Selling assets to make your bottom line look good

Virgin on the ridiculous
 

"‘Specialists’’: Anyone with ‘specialist’ in their job title should be dispatched to the unemployment line."

I know the word "specialist" isn't used but aren't pilots, reservations agents, operations personnel, loaders, "technicians"/engineers all specialists in their fields?

How long can they survive? Looking at the financials, for while longer yet. They had $1.7 billion in the bank at the end of June, but do have just over $1 billion in debt repayments due in 2020. But the operations are making decent cash flow, and given they pay off the last of the aircraft that were under the EENs next year, their unencumbered asset base should rise. If they can pull off the labour and supply chain savings of $75 million and $50 million, then it becomes easier. Get the network right and optimise it for cash generation rather than dick measuring, and it'll be a doddle.

I realise that real people are going to lose their jobs here, so I'm not trying to be trite. But Scurrah is right to take the approach he has so that a lot more than 750 people will keep their jobs over the long term, and the public of Australia get a choice of two well-funded airlines to fly on.

IIRC some years ago Toll GAVE AWAY their shares in Virgin. It shows how highly they valued it.

It is in the best interest of QF to keep Virgin going. The CFO has said so himself. Better to have a competitor that you know and can handle, (happy for them to make money just not so much that effects QF core business) than some new competitor that you don't know.

Yes and yet another line of excuses yet again "it's the market", "it's the currency", "it's the tooth fairy"... whatever... despite what people think of the competition they just announced a nearly $900M profit. There needs to be a top to mid level clean out at this organisation and I mean a CLEAN OUT... not a "right-sizing" and the rest of the BS... they mumble this garbage language every time they publicly announce anything yet they can't run the fundamental business profitably.

Wouldn't blame the new bloke as he's only been there 5 mins but in any other serious business this would bring on a massacre level of redundancies and targeted at those that don't contribute or are incompetent. It's gone beyond a joke now. For all it's glorified reputation I'm stunned SQ hasn't pulled the plug - you'd think any other company the storming out the door of it's major shareholder in Air NZ a few years ago would have had the then CEO's head on the chopping block the next day but no, he stayed and continued to be paid bonuses. If it weren't so serious it would be sickening.

One of the reports said that the 750 was approximately 7.5% of the total staff so I'd say from that, around the 10,000 mark.

No. It's different because QF made substantial profits before and after that... it was a write down with the underlying loss being something like $646M if I recall correctly. Add up all of QF's losses and profits over the last 10 years and it's in positive territory, do the same for Virgin and it's well and truly negative. Also, someone needs to tell the paper it's Virgin Australia Airlines not Virgin 'Airways'.

I doubt that will happen. If Qantas were to be in that position I wouldn't at all be surprised if NZ started a low cost domestic operation or even one of the US carriers.

I think it should be the opposite. Every contract company throughout the network is useless. Never enough staff, running between aircraft, even serving the opposition at the same time. Always new people, with little to no training and no idea.

I do not consider OTP a priority but get into the Gold Coast 10 minutes early and nearly always leave 10 minutes late.

I feel for the 750 staff, not nice to lose your job. A lot of us on here have been there. BUT, I have no doubt there are a LOT of people doing sweet f^&ck all day in and day out. One thing the airline has always been good at, is creating positions for people that do not really make any difference to the operation one bit.

Paul has certainly been given a poisoned chalice. I hope he can come through with the goods.

That would be plausible and probably correct in most other businesses, but this one has been incompetently managed and not made a profit for YEARS... it's not like he came in and rang alarm bells and allowed it to tank as you say, it was at the bottom of the Marianas Trench gasping for the last breath of oxygen from it's International Airline Consortium SCUBA tank before PS arrived.

You forgot 'charging a small fortune when costs could be kept in-house'....

Spot On What The
 

Sooo true, watch it lose money until all the major EBA's are signed for no increase, then a miraculous turn around

If I were Delta, I'd step in and offer to put the owners out of their misery and offer a low price for the whole outfit. I'd insist it were NOT on a transmission of business basis so that I could throw away anything of no value and just keep the core... Order a bunch of decals for temporary application to the remaining aircraft and then re-employ those I wanted on new conditions. Re-brand the whole thing Delta Australia, keep the colours for cheaper transition and get rid of the archaic reservations system and deploy Delta's IT platform, offshore all the maintenance to the United States to Delta's technical division other than daily maintenance and get rid of every aeroplane that doesn't exist in the parent DL fleet already. LAX would be gone, absorbed into DL, HKG gone, a fleet of 737-800s and get rid of Tiger, just merge any part of value into mainline. Contract out everything except for front line supervision, back office, etc. Load Control as it would presumably now be in the Delta system could be done remotely from Atlanta. Reservations similarly could be done by a combination of res office here and out of hours switched through to the USA (just like QF did with Tulsa and Hammersmith in the 80s and 90s).
I'm no big fan of the Americans as a nation at the moment, but their companies know how to clean a place out and re-set the priorities to making money, particularly in somewhere like Oz where they only have one major competitor.

Someone commented that some employees are classified as "specialist". In the Australian context, that seems odd but how odd is it to have a General Manager Customer Journey? Believe it or not, that position exists at Tiger!